Late last year, then-shipyard owner Northrop Grumman indicated that it was considering a location at City Center for its new world headquarters, according to a memo by Newport News City Manager Neil Morgan. Huntington Ingalls was recently spun off into a new stand-alone company, including the Pascagoula, Miss., shipyard.

Instead of at City Center, the shipyard's world headquarters will be in the top two floors of the Virginia Advanced Shipbuilding and Carrier Integration Center in downtown.

"The good news is that (the shipyard) has committed to being in Newport News," Morgan said. "That was our No. 1 concern."

Jerri Dickseski, the shipyard's vice president of communications, wrote in an e-mail response to the Daily Press that the integration center was chosen because it was a secure facility, had existing information technology infrastructure and "flexible space configurations to host multiple kinds of meetings."

"After much consideration, we selected the top two floors of (the integration center) because it met all the requirements, was available for immediate occupancy and was the lowest cost alternative," Dickseski wrote.

Asked whether the downtown location was temporary or permanent, Dickseski wrote that they didn't have anything to add, other than that they were focusing on the downtown location.

Florence Kingston, the city's development director, said she was told by company officials that the downtown location would be the home for the world headquarters for at least the next two years. Kingston said as far as what would happen after that, it's unknown.

"I was told that one plus (for downtown) is that it keeps everyone together in the same area," Kingston said.

Morgan said city officials were worried that the corporate headquarters, which would house about 100 employees, would locate in a different city, so the city prepared an incentive package to keep them here. He said the incentives would have included $300,000 per year in taxpayer money to move to a new office building in City Center, taking up the top two floors of a four-story building.

Morgan said the $300,000 would have been based on a percentage of the rent that the shipyard would have been paying to City Center.

Kingston said that the design of the 88,000 square-foot building to be located next to Langley Federal Credit Union is on track and has not slowed down, despite the news that the shipyard's headquarters would not be a tenant. The headquarters would have taken up about half of the space at the building, Kingston said. She said she hasn't heard if City Center developers have found a new tenant.

If all goes well, construction would start on the new City Center building later this year, Kingston said.